The Psychology of Reciprocity and Rewards

The theory of reciprocity is a concept as old as time. In fact, the oldest set of written laws in the world talked about it! Now, nearly four thousand years later, reciprocity is just as powerful as ever because of its ability to forge emotional relationships. When you do something that benefits someone else, the emotional connection you’ve created with them makes it more likely for them to respond with a positive action that benefits you in return.

While you might think this theory applies more to your connections with friends and family, it also plays a key role in how you should approach relationships with your customers.

What is reciprocity?

If a friend helped you move into a new house and then later asked if you could help them move, would you assist them?

If you said yes to the question above, congratulations! You’ve taken part in a reciprocal relationship! The theory of reciprocity states that when prompted by an action, most people will attempt to reciprocate (pay back) the action. In other words, if you do something nice for someone else, they should do something nice for you in return.

This concept has proven to be especially powerful when applied to businesses. Whether it’s a waiter giving you a free mint to increase their tip or a store validating your parking, businesses have had a lot of success encouraging profitable behavior. By giving a little they stand to get a lot, and the best way to build these two-way relationships is a rewards program.

How reciprocity works with reward programs

Reward programs are the perfect way to jumpstart the emotional, reciprocal relationship between your brand and your customers. That’s because they give customers additional value in the form of free products, special events, or discounts for engaging with your store.

The power of reciprocity: if a customer receives positive treatment - like loyalty program rewards - they will be more likely to ‘return the favor’ in the form of more visits, purchases, or referrals.

When customers are treated to a brand experience that acts in their best interest rather than the company’s, it leaves the customer with the feeling that they should return the favour. These feelings - combined with the awesome rewards they earn - are ultimately what brings them back to make a second purchase or prompts them to share the brand with their friends.

As a result, these emotional reactions to reciprocal business practices are even more valuable than immediate sales. Ultimately it’s this emotion that powers a customer’s decision to return and continue interacting with your brand again and again.

How to implement reciprocal rewards (and the psychology behind it)

Now that you understand what reciprocal relationships are and how rewards help create them, let’s dive into some specific examples of how you can design your rewards program to build better reciprocal relationships.

Offer welcome points and birthday points

Giving customers points simply for having a birthday or signing up for an account makes it easy and valuable for customers to see why they should be a part of your program. When your brand rewards them for actions that they need to do little (if anything) for, it makes them feel like you’ve done them a favor! In return, your customers will want to reciprocate your generosity by making a purchase.

Even better, these rewards have lasting effects on a customer’s perception of your business! These positive reciprocal relationships create the emotional connection between you and your customers that keeps them coming back. Now everytime they think of your brand, they’re reminded of the wonderful first experience they had and will come back to replicate it.

As a brand for new parents, Baby Tula understands the importance of creating emotional relationships with their customers. In an effort to make every interaction rewarding, valuable, and joyful, they offer both welcome points and birthday points to their customers. They’ve even gone a step further by making the number of points earned quite generous when compared to some of the other rewards they offer. These substantial rewards are the perfect first impression for their Collector Club rewards program, and establish a great sense of reciprocity from the very first interaction.

Offer reciprocal rewards for social sharing

Rewarding customers who follow and share your brand on social media or through email is another easy, awesome way to intentionally create reciprocal relationships using your rewards program.

These actions are valuable to you as a brand because they allow you to grow your business by taking advantage of your customers’ social circles.When your customers see that a reciprocal reward is in place for sharing or following your brand, they can understand the immediate value in completing each action. They understand that they are helping you build your social presence but that they will also receive something valuable in return.

The House of Flynn is a great of example of how you can enhance your social presence using reciprocal rewards. They reward customers points for liking or sharing their brand on Facebook, as well as for following them on Instagram. They even take it one step farther by showing off customer photos on a separate page of their store.

This is incredibly valuable for their customers, who take a lot of pride in the content they share on their personal profiles. By featuring their best customers on a high traffic site, they open themselves up to free product marketing and enrich their customers’ experience in the process!

Referrals are the perfect way to offer reciprocity

Referrals open up a trifecta of reciprocal relationships between you as the brand, your customer as the referrer, and your customer’s friend as the person being referred. The key to this working is clearly establishing a reciprocal agreement between your customer and the friend they refer to your store. By rewarding both the sender and the receiver of the referral, your customer feels comfortable sharing your brand because they can see that they’re both givingandreceiving value. This convinces them that committing this action is a mutually beneficial decision.

Dollboxxhas reciprocal referral rewards down pat with a rewards program that really makes you want to participate! For every friend you refer, you’ll receive 1,000 points (equivalent to $10) while your friend receives 20% off their first order. Dollboxx has expertly crafted these rewards to be valuable for both parties so that everybody feels appreciated and special! This builds a reciprocal relationship where both parties now feel obligated to make a purchase to repay your generous rewards.

Learn how to expertly build a referral program.

Take advantage of the psychological effects of reciprocity by building a world class referral program!

Build reciprocal relationships by including free gifts with orders

Nothing says value to your customers quite like the word “free.” That’s what makes free products such an effective incentive. When you’re fulfilling your orders, why not give your customers a little something extra? This could be anything from a couple stickers to some free product samples. These small bonuses don’t cost you very much but they can make a world of difference with your customers.

When customers get more than they paid for, they feel like they’ve been given VIP treatment. This translates into an understanding that your business cares about them, and this of course is the key to building an emotional connection with your customers. These small but mighty rewards make customers feel like the extra value and care that your business provides is a reason they should reward you with purchases in the future.

When a friend recently ordered from Garden Goodies, she was pleasantly surprised to find free samples of products included with her order! This increased the sense of value she got from the brand and deepened her emotional connection with them as a result. Each of the samples she received made it more likely that she would order them the next time she made a purchase, and continued to make her feel good about her purchase decision long after the box had been opened.

Reciprocity is the key to a successful rewards program

The key to building emotional connections with your customers lies in creating reciprocal relationships. If you focus on using your program to delight your customers, the reciprocity will follow! By putting each of the strategies we outlined you’re sure to keep your customers in love with your brand, and start reaping the benefits of reciprocity!

Reciprocity is only the beginning of rewards psychology.

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